Customs, Excise and Gold Tribunal - Mumbai
Sushripada Chemicals vs Commissioner Of C. Ex. And Customs on 25 April, 1996
Equivalent citations: 1996ECR64(TRI.-MUMBAI), 1996(88)ELT109(TRI-MUMBAI)
ORDER R. Jayaraman, Member (T)
1. In both the cases, after hearing both the sides, we find that the issue falls within a short compass and hence with the consent of both the sides, we took up the appeals themselves for disposal waivering pre-deposit.
2. The aforesaid appeals involve in consideration of common issue, though covered by 2 different orders cited above. In the said orders, the Commissioner of Central Excise, Surat has ordered reversal of Modvat credit amounting to Rs. 16,54,968/- in one case and Rs. 1,00,722/- in another case. The main ground for denial of the Modvat credit is that M/s. Sushripada Chemicals filed the declaration under Rule 57G of the Central Excise Rules and were receiving inputs, which were utilised in the declared final product. However, in April, 1990, consequent on amalgamation of M/s. Sushripada Chemicals with HAP Chemicals Enterprises, it became a division of HAP Chemical Enterprises. Thereafter, L-4 licences were obtained duly amended in April, 1990. However, they have not filed a fresh declaration under Rule 57G for availment of Modvat credit. Only on account of this, the entire credit has been ordered reversal by invoking the extended period alleging that they were availing the Modvat credit without revealing the Department that they have not filed a fresh declaration.
3. After hearing both the sides, the following facts are not disputed. The inputs as well as the final products have been duly declared in the declaration filed by M/s. Sushripada Chemicals. As per the terms of amalgamation, all the rights and liabilities of M/s. Sushripada Chemicals have been taken over by HAP Chemicals Enterprises. It is not the case of the Department that either there is a change in the inputs or change in the final products. The Commissioner of Central Excise has held that it is the manufacturer, who is required to file the declaration under Rule 57G and the declaration is a mandatory requirement, which has not been given by the amalgamated unit, after obtaining the licence duly amended. Though, Rule 57G prescribes the declaration to be given by the manufacturer, this declaration is mainly to intimate the department of the nature of the inputs sought to be brought in and the way they are going to be used in the manufacture of the final product. The substantive part of the declaration is very much available and it is continued and the inputs as well as the final products relate to the same factory. There is only a change in the control over the unit consequent on amalgamation. In the circumstances, even if a declaration by the new unit is called for, it can be only construed to be a technical requirement and cannot be construed to be a substantive violation of Rule 57G. Hence, on merit itself, there is no justification for ordering reversal of Modvat credit.
4. Apart from the above, show cause notices in both the cases have been issued beyond a period of six months. Credit has been taken in the month of April, 1990 to November, 1990 covered by show cause notice dated 14-3-1995 in one case and in another case, credit has been taken during July, 1990 to 25-11-1990. The allegation for invoking the extended period also does not appeal to us. The Department was well aware that a change consequent on amalgamation has been effected in the L-4 licence as early as in April, 1990. The Department was also aware that declaration has been filed by M/s. Sushripada Chemicals. Hence, when the unit was amalgamated, it was also incumbent on the part of the Department to insist on a fresh declaration, if, on technicality, it is warranted. There is no question of suppression of fact or non-declaration by the amalgamated unit. Moreover, what would be the gain to the amalgamated unit by non-declaration? By not filing the declaration, their intention cannot be towards evasion of duty. Because, even by filing the declaration, they would have got the Modvat benefit, which is otherwise available. Hence, this omission alleged on technicality cannot be construed to be a case of deliberate suppression, fraud or misdeclaration, justifying extended period. Hence, apart from the non-sustainability of the demand on merits, demand is also time barred. We, therefore, allow both the appeals. Stay petitions may also be treated as disposed of, in view of the disposal of the appeals.